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Why "Government Motors" Still Owes You

GM has technically satisfied the terms of its bailout, but it still owes taxpayers a lot of money.

Officially speaking, the answer is a pretty clear "no." GM has satisfied the terms of the $49.5 billion bailout that gave the giant automaker a new lease on life in 2009, paying back the debt as agreed -- with a mix of cash and stock.

The U.S. Treasury Department is in the process of selling off the last of its GM stock holdings. Once that's completed -- early next year, most likely -- GM's bailout repayment will be a done deal.

Officially speaking.

But the truth is, even once all that stock is sold, GM's "repayment" will be well short of that $49.5 billion. And that could turn out to be a big problem for General Motors.

Why does GM still owe us?Here's the problem in a nutshell: Unless GM's stock price goes way up, and soon, the amount of money ultimately recouped by the Treasury is likely to fall short of that $49.5 billion -- probably about $12 billion short.

$6.7 billion in cash, per the terms of the original bailout. The last of it was paid in April 2010, when then-CEO Ed Whitacre famously declared that GM's debt had been "paid in full" -- and promptly heard about it from angry taxpayers.

$13 billion to the Treasury in GM's IPO, in which the government sold about 45% of the GM stock it had received after the bailout.

$2.1 billion when GM bought back some preferred stock from the Treasury in late 2010.

$5.5 billion directly from GM, when the company bought back 200 million of the feds' remaining 500 million shares last December.

$646.3 million in sales of GM stock on the open market by the Treasury in January and February of this year, part of Treasury's plan to slowly sell down its remaining shares over the next year or so.

The remainder in interest and dividends on loans and preferred stock.

Plain and simple, that leaves about $20 billion outstanding. As of the end of February, Treasury still had roughly 277 million shares of GM to sell. To make that math work -- to make taxpayers whole -- Treasury needs to get roughly $72 a share for its remaining GM stock.

As I write this, GM stock is trading for a little over $28. If it sold all of its remaining stock at that price, the Treasury would still be about $12 billion short.

And while GM has done everything it was required to do to pay back the bailout, that shortfall is likely to be a big PR problem.

Value received for the government's investmentOf course, GM would probably argue that it has already made good on the government's "investment" in a number of different ways. Speaking to dozens of lawmakers on Capitol Hill Thursday, GM CEO Dan Akerson pointed out that, since 2009, GM has created or retained more than 23,000 U.S. jobs and has invested $8.1 billion in 34 U.S. factories.

That's all true. While GM's turnaround is arguably still a work in progress, the company is in pretty good shape today. It is solidly profitable, has plenty of cash, and carries minimal debt, and its recent products have been good ones -- in some cases, very good.

GM isn't the world's greatest automaker, at least not yet. Its profits still trail those of its two biggest rivals, Volkswagen and Toyota, by a wide margin. But it is doing well, thanks to much-improved products, management that is working to resolve the company's remaining issues -- and the new lease on life it received from American taxpayers in 2009.

So will GM pay us back?GM, like rival Ford, holds a big cash reserve as a sort of insurance policy -- $26.1 billion as of the end of last quarter. The cash allows the company to continue funding product development in the event of a tough recession that crushes profits. The hope is to emerge -- as Ford did from the economic crisis, thanks to cash it had borrowed beforehand -- with strong new products to drive sales as the economy recovers.

Right now, the U.S. economy is in decent shape -- at least decent enough that GM is making money. GM can probably afford to spend some of that cash to make taxpayers whole. Will it? We'll find out.